Written by Thomson Reuters
We have been monitoring the ongoing saga of the Payroll Protection Program. What is clear is banks are not ready for tidal wave of applications heading their way. The bank websites that I visited yesterday (April 2, 2020) were not ready to accept applications starting today, April 3rd.
The Paycheck Protection Program landing site for my bank currently states “we are working to facilitate your participation in recently enacted federal relief programs…” and, after filling out the contact form, states that a bank “Representative will contact you with next steps.” The FAQ section question about documentation states that “we are waiting for final program details from SBA”.
In addition, the loan provisions are changing. Yesterday, Secretary of the Treasury announced that the initial loan rates would be 1% rather than the initial .5% just posted a few days ago. The draft SBA Form 2483, Paycheck Protection Program Application Form, discloses a modification to the loan forgiveness provisions “Due to likely high subscription, it is anticipated that not more than twenty-five percent (25%) of the forgiven amount may be for non-payroll costs.” If you want loan forgiveness most of the funds should be spent on payroll. Even though the law allows the use of the loan proceeds for such things as mortgages interest, lease payments, utilities and interest on preexisting loans, the priority is on payroll. I expect many of us looking to cover overhead times are likely to receive loans in amounts below the calculated maximums after processing.
No wonder the banks are scrambling to keep up. I expect today makes fools out of bankers, business owners and business advisors. Perhaps, April 1st would have been a more appropriate launch date.
So, what can you do?
What information should you gather? The best synopsis I have seen has come from PNC bank’s website. The bank suggests that you obtain copies of the following:
In closing, I wish you all the best of luck, stay calm, stay safe. We will all get through this.